Suspected Market Manipulation as Prices Rise in Dunkelflaute and Fossil Generators Remain Unused
On December 12, Germany experienced a significant surge in electricity prices, prompting the Federal Network Agency (BNetzA) to investigate potential market manipulation. Head of BNetzA, Klaus Müller, expressed serious concern about the price spike and mentioned the need to invest in flexible capacity for the country. Market manipulation could involve companies withholding backup plant capacity to artificially inflate power prices.
During a recent period with low wind and solar output, intraday power prices briefly soared above 900 euros per megawatt hour. The unavailability of fossil fuel plants was a contributing factor to the price spike not only in Germany but also in neighboring European countries. BNetzA assured that power supply security was never compromised, but operators failed to dispatch backup power plants even when prices exceeded 300 euros per MWh.
Although most consumers with fixed-rate contracts are shielded from such price fluctuations, industrial consumers with flexible contracts could feel the impact of these spikes. BNetzA warned that similar price hikes could occur in the future, emphasizing the need for regulatory measures to bolster the construction of steerable power plants.
In a separate incident, Sweden also experienced a sudden rise in power prices on December 12. Swedish Energy Minister Ebba Busch blamed Germany’s energy policy and the phase-out of nuclear power for the price hike in her country. Germany’s economy ministry defended its energy policy, stating that the EU’s energy market framework is designed to enhance efficiency and benefit consumers across the region through imports and exports.
The analysis of wholesale power prices throughout 2021 revealed variations between Germany and its neighbors. While Nordic countries often had lower prices, eastern and southern neighbors tended to have higher prices. Overall, the BNetzA will continue to investigate potential collusion behind the mid-December price hike and address the need for enhanced capacity and flexibility within the energy market.
